DWP Chief to Work for Davis; Post as Energy Czar Likely

S. David Freeman, the wily 75-year-old general manager of the Los Angeles Department of Water and Power, will resign soon to become Gov. Gray Davis’ chief energy advisor and is widely believed to be a leading candidate to head a new California power authority.

Freeman, who has been credited with making the Los Angeles municipal utility an island of electrical stability in a statewide sea of crisis, will become the governor’s “chief energy czar for conservation,” Davis spokesman Steve Maviglio said Monday.

Maviglio refused to confirm that Freeman would head the yet-to-be-formed power authority. He said that Davis did not rule out such a move, but that an announcement would be premature because the Legislature has yet to pass the bill that would put the authority in business. Los Angeles Mayor Richard Riordan, however, said Monday night that Davis has told him that Freeman would be appointed to the power authority job once the agency is created.

Regardless of his specific job title, Freeman is expected to be in position to significantly shape the state’s energy policy as Davis struggles to keep prices under control and prevent widespread blackouts this summer.

A power authority has been proposed as the vehicle by which the state could purchase the electrical transmission grid now owned by California’s private utilities. The agency also could have broad power over conservation programs, construction of new power plants and rehabilitation of current power facilities.

Freeman would bring unparalleled experience to a state energy post. In a long and storied career, the wisecracking Tennessee native has run three of the largest public power authorities in the United States--the Tennessee Valley Authority, the New York Power Authority and the Lower Colorado River Authority in Texas. He also served as energy advisor to President Jimmy Carter.

Earlier this year, Freeman worked for Davis as California’s chief energy negotiator, hashing out the prices and terms of long-term electricity contracts for the state.

“I don’t think you could find a better qualified guy than David Freeman,” said state Senate President Pro Tem John Burton (D-San Francisco). “There aren’t a . . . lot of guys around who have done half of what he has done.

“If we are going to be in the business of building power plants and selling energy, he’s the man,” Burton said.

Although many Republican lawmakers oppose the creation of a public power authority, few have any criticism of Freeman.

“Dave Freeman is a smart person who has forgotten more about energy than most people have ever learned,” said Senate Minority Leader Jim Brulte (R-Cucamonga). “If you are going to create a public power authority, someone like Freeman is the type of guy you want running it.”

In a brief interview Monday evening, Freeman said he expects to start his new job by May 1.

“I’m going to have a role in getting people to understand that we have to conserve energy this summer,” Freeman said. “Conservation has been my life’s work.”

Freeman declined to comment on the power authority, but said he wasn’t surprised that Davis offered him the conservation job.

“I spent four or five weeks on power purchasing and long-term contracts,” he said. “We worked real well together. . . . We are going into a crisis this summer, and frankly I think everyone understands that the L.A. DWP is in great shape now. They don’t need me.”

The idea that Freeman might head a California power authority has been discussed for months--he was one of the original proponents of such an agency. But the speculation moved into the open Monday when Los Angeles City Councilwoman Ruth Galanter sent a letter to her council colleagues saying Freeman was quitting the DWP to head the state authority.

“Gov. Davis will make a public announcement to this effect either today or tomorrow,” wrote Galanter, who heads the council’s Energy and Natural Resources Committee.

Davis, apparently caught off guard, responded with a statement naming Freeman to oversee the state’s newly expanded, $850-million electricity conservation program. Freeman has been a strong proponent of conservation during his 3 1/2 years at the DWP, and earlier as head of the Sacramento Municipal Utility District.

Davis has touted energy conservation and the creation of a state power authority as two major planks in his program to address the power emergency. Soaring wholesale prices for electricity have beached California’s two largest private utilities, Pacific Gas & Electric and Southern California Edison, which have been unable to make enough money to pay their bills. PG&E; recently filed for protection in federal Bankruptcy Court, and Edison has been kept running only through massive infusions of state cash.

Under a bill working its way through the Legislature, a state power authority would have the responsibility of issuing revenue bonds for as much as $5 billion for the purchase of the statewide electrical transmission grid and other assets from Edison, PG&E; and San Diego Gas & Electric. The bonds would be repaid with transmission charges on utility bills.

Edison has reached a $2.7-billion agreement to sell its transmission assets to the state. San Diego Gas & Electric is still negotiating with the state, but talks with PG&E; broke down after that utility, the state’s largest, filed for Chapter 11 bankruptcy reorganization.

In addition to owning the grid, the proposed authority would have the power of eminent domain under certain conditions, allowing it to seize land and existing power facilities. In the current bill there is no estimate of the amount of funding needed to create the authority and pay its staff.

Davis said last week that the authority would build and operate new power plants only if private companies fail to build enough to give the state a 15% cushion on top of its basic electricity needs. That could happen, Davis said, since private companies have no incentive to create enough of a surplus to dramatically lower prices.

The governor joked that his “fallback plan, if all else fails, is to have the Department of Water and Power annex the rest of the state, and we’ll all be served by the Department of Water and Power, and we’ll have low rates, and I won’t worry about it.”

As head of the DWP, Freeman underwent no small amount of criticism for building up power supplies that critics believed were unnecessary--at least until the rest of the state was plunged into an electricity supply crisis.

Since the crisis began, he has luxuriated in the adulation of many political leaders and ordinary ratepayers, who see the DWP manager--with his trademark white cowboy hat, arching eyebrows and Tennessee twang--as an energy seer.

But as reaction poured in to his pending resignation, it was obvious Monday that he still has enemies.

“The sooner the better,” said Councilman Nate Holden, who has strongly criticized Freeman for, among other things, trying to sell a city-owned, coal-burning power plant in the Mojave Desert. “He should leave right away.”